20 April 2018
The VAT road fuel scale charges are amended with effect from 1 May 2018. Businesses must use the new scales from the start of the next prescribed accounting period beginning on or after 1 May 2018.
If your business pays for fuel in a car, the business can only reclaim VAT to the extent the fuel has been used for a business journey.
So if an employee or Director has a fuel card for example, the driver may use the vehicle to visit a client or supplier but are likely to use the vehicle at the weekend or during the day for non-business journeys.
An apportionment of input tax is required to reflect the non-business use of the fuel the business has paid for.
Road Fuel Scale Charges
You could use mileage sheets to record each business journey to arrive at a proportion of fuel that was for business use, but its time consuming. This is where the Road Fuel Scale Charges come in, as a simplification, based on CO2 emissions of the vehicle.
For example, the vehicle is a modern, small engine car with CO2 of 125. The tables for quarterly VAT returns states that the business declares £175 as a sale (Box 6) and corresponding output tax of £35 in Box 1. A total value of £210 for the quarter.
Over 4 returns/year that is £35x 4 returns = £140 output tax. In theory, the output tax of £140 you owe to HMRC should be less than the input tax the business reclaims from fuel card purchases.
The tables can be found here -
http://www.gov.uk/government/publications/vat-road-fuel-scale-charges-table/vat-updated-valuation-table-road-fuel-scale-charges-from-1-may-2018-to-30-april-2019
Don’t leave this to chance, so speak to your advisors or speak to us, our VAT advice is not as expensive as you think.
